Out of 49 Asian cities in this year’s survey, the city of Bishkek in Kyrgyzstan ranked 226th, is the least expensive place in Asia for international employees to live in
Asia dominated the world’s most expensive city rankings, with Hong Kong SAR taking top spot as the costliest place for employees working abroad. Four of the cities in the top 10 are located in Asia. Besides Hong Kong SAR, others are Singapore (8th), Tokyo (9th) and Beijing (10th).
Four cities in Switzerland – Zurich, Geneva, Basel and Bern – ranked second to fifth respectively, along with Tel Aviv (6th) in Israel and New York (7th) in the United States rounded off the Top 10 list, according to Mercer 2022 Cost of Living City Survey.
This year’s ranking includes 227 cities across five continents, comparing the cost of more than 200 items in each location in March 2022. To stay up-to-date with the spending patterns of the expatriate workforce, Mercer revamped its Cost of Living methodology this year with new items such as smart watches, tablet computers and smartphones added to the basket and non-relevant items such as music CDs and video movie rentals removed.
In recent years, exchange rate changes have had more effect on cost-of-living indexes than inflation. However, this is no longer the case in 2022 due to rising inflation in developed economies. As travel and international mobility resumes, companies now face the challenge of ensuring the spending power of mobile employees are not affected, Mercer said.
In addition to cost of living data, mobility research conducted by Mercer and the learnings from Mercer’s work with clients reflects that the impact of Covid-19, the crisis in Ukraine, exchange rate variations and widespread inflations are having a material impact employees’ pay and savings. This can have serious consequences for employers in the global battle for talent.
Higher prices coupled with a stronger Thai baht also made living in Bangkok (106) the second most expensive in Southeast Asia, after Singapore. Other cities in the ASEAN region include Manila (122), Phnom Penh (134), Hanoi (150), Jakarta (151), Vientiane (157), Ho Chi Minh City (163), Bandar Seri Begawan (179), Kuala Lumpur (181), Yangon (198) and Johor Bahru (211), the least expensive city in Southeast Asia.
Cost of Living in India
In India, inflation and currency fluctuations were small but Mumbai (127) remains the most expensive city, followed by New Delhi (155), Chennai (177), Bengaluru (178), Hyderabad (192), Pune (201) and Kolkata (203), the cheapest city in India.
Of the 49 Asian cities that were included in this year’s survey, the city of Bishkek in Kyrgyzstan ranked in 226th place, is the least expensive place in Asia for international employees to live in.
Tracey Ma, Mercer Regional Mobility Leader, Asia Pacific, said: “Despite the relatively lower inflation in Asia compared to the rest of the world, high prices and strong currencies with the exception of Japan and Korea, continue to propel Asia as one of the most expensive regions for international employees.
“In the past months, the strength of the Chinese Yuan has also made Mainland China pricier to live in. Six of the main cities – Beijing, Shanghai, Shenzhen, Guangzhou, Qingdao and Nanjing – are among the top 10 most expensive cities in Asia. In contrast, Japanese and Korean cities have become relatively more affordable due to a weaker Japanese yen and Korean won.”
International assignment patterns are evolving faster than before. With the rise of remote and flexible work, companies need to rethink their approach to managing a globally distributed workforce with an optimized mobility program which aligns with the business strategic planning and achieve both cost efficiency, compliance and talent attraction.
More companies are adopting the local-plus compensation approach to pay their foreign employees and increasingly, mobility programs are utilized as tools for companies to develop their high potential talent, rather than support mechanisms to make up for talent shortages in certain areas within the organization.
“We’ve also observed a significant decrease of inbound international assignments into Asia in the past 18 months. Talent shortages, especially for highly-skilled IT professionals, have become an issue for some countries, with the rapid adoption of technology and digitalization,” added Ma.
Commenting on the longer-term impact on global mobility practices triggered by Covid-19 and the crisis in Ukraine, Ma said, “The economic and political uncertainty pushed prices upwards and caused significant increases to the cost of living, even in developed and stable markets across Asia.
“While the onus is on employers to act quickly to attract and retain key talent, they need reliable data and clear strategies to navigate mobility packages in times of uncertainty. This will help to ensure their employees’ financial wellbeing as well as business efficiency and equity.”